What is an Appointed Representative? – Insurance Questions Answered


white head cartoon with queston mark insideAn appointed representative is an individual or firm that is allowed to undertake the sale of general insurance business without having direct authorisation to the Financial Services Authority.

This is done by the company or individual working with a Principal that is directly authorised by the FSA.

The obvious advantages to this are both cost and speed. At the time of writing, the FSA authorisation process takes a minimum of 6 months. Add to that the time taken to build a business plan, obtain agencies and implement strategies, this can easily be a 12 month process without having written a single piece of business.

In addition, the Principal will either outline fixed costs or a percentage of the commission earned (or a combination of both) for the use of their facilities. What it allows is for the Appointed Representative firm to spend much of its time sourcing business.

It is ideal for anyone wanting to start up business but have difficult time scales to accomplish or feel they have to break away from a current position quickly and need a suitable alternative whilst they apply for their own authorisation. It is also useful for companies where the main function is not insurance, although most principals would only provide that these types of functions are limited to the introduction of clients, thus removing the sales process.

The one obvious disadvantage is that if the principal withdraws facilities then the trading position of the Appointed Representative stops immediately until they either obtain full authorisation or join another network. Hence, it is important that a solid contract is formed between the 2 parties.

It has become a popular business model and it looks to continue strongly in the future.


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